Insurance is a contract of promise in exchange for premium payment. Every insured who comes to the insurer for insurance has an insurable interest in the subject matter of insurance. If you have been reading my articles, am quite convinced you would understand who an insured or insurer is? and what insurable interest or subject matter of insurance is?
However, visit this link for a refresh.6 FUNDAMENTAL PRINCIPLES OF INSURANCE YOU NEED TO KNOW
An insurance contract is taken up by the insured with the insurer in expectation of an indemnity from the insurer should the unexpected happens. To enjoy the benefits from insurance contracts whenever the need arises, the following are the 5 steps involved:
- Call your intermediary
- Report the claim
- Acknowledge the claim
- Investigate the claim
- Settle the claim
CALL YOUR INTERMEDIARY
The contract of insurance is usually facilitated through an intermediary. Intermediaries are brokers, consultants, and agents. Please refer to my article on the intermediary HOW TO BENEFIT FROM THE 4 PARTIES IN THE INSURANCE MARKET. PART THREE
Whenever a loss occurs for example if your insured vehicle is involved in an accident, your first point of contact should be your insurance intermediary. For instance, if you engaged the services of Bimbol Consultancy Services as your insurance consultant, at the time you needed to insure your vehicle, you only need to contact us through a phone call or via email and we will process the claim on your behalf to your satisfaction.
REPORT THE CLAIM
Once your broker or consultant has been informed about the loss, your broker/consultant advises you on the necessary documentation that will support the claim process. When all the forms are completed, your consultant submits the documents to the insurer and formally registers the claim with the insurer.
ACKNOWLEDGE THE CLAIM
Once your claim has been officially registered with your insurer through your insurance consultant, the insurance company will write you to acknowledge the claim that has been registered and identify with you on your loss.
The insurance company will also state in their acknowledgment letter to the insured that the claim will be reviewed for necessary action.
INVESTIGATE THE CLAIM
What the insurer does at this stage is to review the claim that has been registered under the following conditions
- Has the premium been paid?
- Is the loss covered?
- Did the loss occur as a result of the operation of the insured peril? (The proximate cause)
- Was the loss adequately covered?
- Did the loss occur during the insurance year?
Once the above conditions are met, the insurer is obligated to process the claim to fulfill his own part of the contract.
Now let’s consider each of the above conditions:
Has the premium been paid?
Premium is the consideration an insured paid to the insurer to execute an insurance contract. The business of insurance is done on a “No premium no cover basis” when a claim is submitted to the insurer, upon investigation from the claim’s unit of the insurance company, if it is discovered that the premium has not been paid, the claim will not be processed. If the premium was not paid, then there was no contract. This can happen, if the client is an existing client of the particular insurance company, of which when the insurance contract was due for renewal, the client was yet to renew, then the loss occurred. This is why it is always good to renew your insurance contract as at when due. It is our culture at Bimbol Consultancy services to send a renewal notice to our clients at least twice before their insurance contracts are due.
Is the loss covered?
When a claim is submitted, the insurer will investigate to ensure if the loss that occurred was the same loss that was covered. For example, if an insurer has insured Toyota highlander 2020 with the insurer, but his Honda pilot 2019 which was not insured got involved in an accident. Although the insured has an insurance contract with the insurer for his Toyota highlander 2020, his claim will be declined because his Honda pilot was not insured. An insurance contract is risk specified contract.
Did the loss occur as a result of the operation of the insured peril? (The proximate cause)
The insurer will need to know the proximate cause of the loss. Please refer to my article on the proximate cause. THE 3RD FUNDAMENTAL PRINCIPLE OF INSURANCE. When a loss occurs as a result of the peril that was covered, the claim will be processed.
Was the loss adequately covered?
The insurer will need to find out if the loss was adequately covered in order to provide adequate indemnity. If the loss was not adequately covered, the claim also will be proportionately administered.
Did the loss occur during the insurance year?
If the loss did not occur during the insurance period, the claim will be declined. The insurance period is the duration for which the premium paid could cover. Some clients usually negotiate to pay their insurance premium in installments, if for instance an annual premium was negotiated to be paid quarterly by an insured if the insured has paid for the first quarter and is yet to pay the premium for the second quarter, should a loss occur during the second quarter in which the client is yet to pay the premium, the claim will be declined, unless the client pays the remaining premium for the year. It is usually advisable to pay your insurance premium in full at the beginning of the contract. Insurance is a pre-paid contract and not a post-paid contract. It is pre-paid because you could only buy insurance before a loss occurs in order to enjoy the insurance benefits in times of loss. However, you cannot buy insurance at the time of loss.
Once the above conditions have been ascertained the claim process will commence
The insurer will assign a loss adjuster to evaluate the loss and submit a comprehensive report on the loss.
This is the insurer’s financial compensation, which is sufficient to restore the insured back to the same financial position he was enjoying before the loss occurred.
The claim manager from the insurance company approves the claim to be paid to the insured, having examined all the supporting documents and related reports submitted on the claim under review, and advises the accounts department of the company to issue the cheque in favor of the insured.
An insurance contract is a contract of promise. The intangibility of an insurance contract becomes tangible when a claim has been successfully executed. When an insured subscribed for an insurance contract and never had a cause to make a claim, it looked as if money or the premium paid has been lost. The reality of the insurance contract is usually embraced whenever an insured experienced a loss during the insurance period and was compensated by the insurer.
The validity of any insurance company is its ability to pay claims to the insured.
Engage the services of Bimbol Consultancy Services when next you need an insurance policy, for the professional advice on the choice of the insurer and the equitable premium payable for adequate cover.
‘”Your insurable interest is our indemnity interest”
08026940605 or 08141637067
We are the insurance consultant of your choice